“Following this milestone the project will commence commissioning of the offshore platform and packing the 187kms of raw gas pipeline that runs from the platform to the onshore processing plant located near Lang Lang,” Origin said in a statement.

First gas sales are expected to begin in February 2005 and design flow rates should be met in March, according to Origin.

The BassGas joint venture has engaged Downer Engineering to complete the remaining rectification works and modify the offshore facilities and onshore processing plant to handle some impurities in the gas stream.

“The original plant design allowed for some of this additional equipment and its inclusion will not materially impact on the economics of the project,” Origin said.

The original contractor, Clough Ltd, was ejected from the project following a protracted and bitter dispute with the BassGas partners over delays to the project.

Clough managing director David Singleton claimed that delays had occurred because Origin had fallen behind with its offshore drilling program and had failed to provide gas suitable for introduction into the development. He also said completion of the offshore works had been hampered because Origin had restricted access and not provided suitable offshore accommodation.

Clough submitted a certificate issued by Lloyds of London certifying the offshore facilities were contractually ready for start-up (RFSU) and implied that the delays had much to do with the mercury levels in the gas.

But Origin said the Lloyds inspection did not cover all of the work required to be completed under the Contract to ensure that RFSU was achieved. It also maintained that Clough was misrepresenting the mercury issue.

"Detailed analysis of the Yolla 4 results indicate that the raw gas is within contractual specifications but that traces of mercury have been detected in the Yolla gas stream," Origin said.

"This eventuality was anticipated in the contractual arrangements with Clough and consequently the onshore plant was designed with the flexibility to deal with this issue. This has not impacted the delays experienced by Clough and is not expected to have any significant economic impact on the performance of the BassGas project."

Origin is seeking liquidated damages for each day the project has been delayed. But Clough maintains it has met its obligations and that many of the hold-ups have been caused by obstructive tactics on Origin's part and, in particular, on the part of the project manager.

Clough wants $25 million in 'quantified' claims from Origin, plus 'further general damages and damages under the Trade Practices Act'. These additional claims are understood to include $12 million in milestone payments Origin has withheld over the past two months and a similar amount in damages.

In December an arbitrator was appointed to sort out this dispute. Professor John Uff QC of Keating Chambers, London – who is experienced in construction disputes and arbitrations – will preside over the first directions hearing in Melbourne early this year.